Removing a director
Evolve20121
(Querist) 18 November 2014
This query is : Resolved
I want to know if there is any clause under which a non-performing director can be removed from the private limited company?
The company has 3 directors with equal shares of 33.33%. there is no AOA done on legal papers but an understanding is signed by all 3 directors. Each director was assigned to generate certain revenue to the business however 1 director (also happens to be investor son) has not been generating any substantial revenue to sustain the expenses however the profits are equally shared. With the revenue generated by other 2 directors are the company is able to meet end needs.
I want to know under what clause we can exit that director and agree on repayment terms to the investor?
Regards,
S
Devajyoti Barman
(Expert) 18 November 2014
Is it your practical query or query of academic interest only?
Clarify.
Evolve20121
(Querist) 18 November 2014
Hi Devajyoti, it's practical query. Once I know if there are any legal options then I would want to approach suitable lawyer who can assist. If there are none then we will have to live with it.
Guest
(Expert) 18 November 2014
I wonder to know, when you say, "there is no AOA done on legal papers," on what basis the private limited company could get regisered withour MOA & AOA?
If it is your practical query and there was an understanding for each to generate certain revenue, any reasonable opinion can be formed only on examination of the terms contained in the MOA & AOA submitted to the ROC at the time of registration of the company and also any agreement, if entered in to at any time by the Directors of the company.
ajay sethi
(Expert) 18 November 2014
agree with dhingraji
Evolve20121
(Querist) 19 November 2014
Thanks psd. What I meant was no agreement done on legal papers between directors. It was verbal that each one would be generating the agreed revenue +- 50k . rest everything is in place (Moa aoa)
Guest
(Expert) 19 November 2014
Thanks for your clarification. In view of that and in the absence of any specific formal agreement amongst the directors, he was not legally bound to generate any revenue. It would have been his sweet will whether to generate nil revenue or even 100% revenue for the company. So, you don't seem to have any specific reason to remove him from the Board.
T. Kalaiselvan, Advocate
(Expert) 19 November 2014
The query raised and subsequent clarifications on the query and opinion to that by expert Mr. Dhingra is a most suited opinion/advise to the subject query. Therefore you cannot either force him to earn revenue for the company or can remove him for non performance, legally.
Evolve20121
(Querist) 22 November 2014
Thanks for all your valuable advice. I guess we can now agree on the legal document with proper clause and start afresh.
Guest
(Expert) 22 November 2014
You are welcome. You may better prepare some fresh agreement to provide condition of earning by the concerned director. Else, status quo has to be maintained.
